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An Oxford Analytica Briefing Book COVID-19 essential briefing August 27, 2020 The Oxford Analytica Daily Brief ® © Oxford Analytica 2020. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact
Oxford Analytica Daily Brief ®
COVID-19 essential briefing
Table of Contents
• p.3.....Pandemic will weigh on green bond issuance this year - August 24, 2020
• p.6.....Lifting COVID-19 measures may hit resilient eastern EU - August 10, 2020
• p.11...Local lockdowns will be key in COVID-19 management - July 16, 2020
• p.12...COVID-19 will drive record Latin America recession - June 30, 2020
• p.13...Global travel deals will be subject to reversals - June 16, 2020
• p.16...Asymptomatic spread will hinder virus control efforts - May 14, 2020
• p.19...First COVID-19 vaccine may not end all distancing - May 12, 2020
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COVID-19 essential briefing
Pandemic will weigh on green bond issuance this year
Monday, August 24, 2020
Issuance in March saw the largest drop in the first six months of this year due to the
pandemic
The green bond market segment saw a major drop in the first half of 2020 due to the impact of the
COVID-19 pandemic on economies and capital markets. The downturn came after a strong 2019 when
there was a record issuance of green bonds. An aerial view shows the Amazon rainforest near
Altamira, Para state, Brazil August 28, 2019
(Reuters/Nacho Doce)
What next
The green bond segment is set to recover during the second half of the year as several governments
are expected to issue such bonds. The strength of the recovery will be closely linked to the evolution of
the pandemic and the inclusion of green components in stimulus measures. Latin America and the
Caribbean will probably remain an area of growth, with governments there issuing more green bonds
in the coming years.
Subsidiary Impacts
◦ Green bonds will be a key part of future efforts to make the global economy greener and more
resilient to future crises.
◦ The development and harmonisation of taxonomies, principles and standards will contribute to the
long-term growth of green debt.
◦ The growth of the green bond asset class will help create new jobs in green finance.
Analysis
The green bond market segment has seen healthy expansion in recent years amid increasing concern
over climate change and sustainability, and growing investor demand for assets linked to
Environmental, Social and Governance (ESG) criteria (see INT: Income and climate change risk are not
correlated - September 5, 2019 and see INT: Cities are at the fore of global warming threats - October
8, 2019).
These use-of-proceeds bonds have also allowed issuers to broaden their investor base and display
their green credentials. Cumulative issuance since the segment's inception in 2007 reached
USD754bn dollars last year.
The outbreak of COVID-19 hit global financial markets hard and the sale of green bonds was dragged
down with it (see INTERNATIONAL: COVID-19 climate impact may be brief - March 27, 2020 and see
INTERNATIONAL: COVID-19 to hinder climate diplomacy - April 14, 2020). Green bond issuance
halved to USD84.7bn in the first six months of 2020 from USD172bn in the same period last year,
according to the Climate Bonds Initiative (CBI), a not-for-profit supporting the development and growth
of the asset class.
Green bond issuance halved year-on-year in the first half of 2020
Issuance fell from USD15.6bn in February to USD3.3bn in March, the slowest month for green bonds
since December 2015.
The January-June figures nevertheless illustrated the resilience of the green debt segment, which
bounced back in April, with issuance of USD16.4bn.
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Full-year outlook
The green bond segment increased last year to a record USD259bn, from USD171bn in 2018. The
total number of issuers increased to 506 from 347, with the largest green bond volumes issued in the
United States, China and France. Energy, buildings and transport were the main categories of green
bond financing in 2019.
Initial expectations were that 2020 would become another record year (see INTERNATIONAL: Green
bond market set to strengthen - September 9, 2019), with the CBI and rating agency Moody's expecting
green debt issuance of USD350bn and USD300bn, respectively.
The impact of the COVID-19 pandemic has prompted Moody's to lower its forecast to a range of
USD175-225bn. The CBI has stuck to its estimate while acknowledging that it has become a
challenging goal; it is bullish regarding the second half of the year, due to the expectation of several
large sovereign issues.
The green bond appetite among financial institutions and corporations during the rest of the year is
more uncertain and will depend on the evolution of the pandemic, economies and financial markets.
Social and sustainability bonds
The health crisis has put a focus on other use-of-proceeds bonds, which have had an unintended
impact on green bond issuance.
Having already seen significant growth in 2019, the sale of social and sustainability bonds saw a
major increase in the first half of the year due to the pandemic. Proceeds from social bonds are
earmarked for projects that have a social impact, while sustainability bonds finance a mix of green and
social projects.
Sales of social and sustainability bonds increased in the first half of
2020
In January-June, the issue of social and sustainability bonds amounted to an estimated EUR34.3bn
(USD40.8bn) and EUR34.0bn, respectively, compared to EUR15.4bn and EUR35bn in the whole of
2019, according to Dutch bank ING.
Several regular green bond issuers shifted their focus to crisis mitigation due to the pandemic, and
ING estimates that EUR8bn went to social bonds instead of green bonds in the first half of the year.
Social and sustainability bonds are set to see continued strong growth this year and beyond as these
securities are expected to follow in the footsteps of the green bond segment, with greater issuer
diversification in terms of geographies and sectors.
With the help of the social and sustainability securities, the broader ESG bond universe could have a
good year in 2020 even if green bonds fail to live up to the initial high expectations.
Strong Latin American potential
Latin America and the Caribbean (LAC) has become the emerging-market region with the largest
number of countries where green bonds are sold.
At the end of 2019, green bonds had been issued in 35 emerging markets, of which eleven were in
LAC, according to cumulative figures from the International Finance Corporation (IFC), the World
Bank's private sector arm. The cumulative green bond issuance for LAC in 2012-19 was USD13.4bn;
last year saw the first-ever issues take place in Barbados, Ecuador and Panama.
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Most of the green bond sales in LAC are still highly concentrated in terms of countries and issuers but
the region is moving towards greater diversification, especially with regard to sovereign issues.
Chile last year became the first LAC nation to sell sovereign green bonds. It made a third issue in
January this year, bringing its sovereign total to approximately USD6.23bn. All the issues saw strong
investor demand and low interest rates, and generated positive international press for the country.
Latin American governments are taking a particular interest in green
bonds
Chile's green bond success is widely expected to lead to sovereign issues from countries such as
Colombia, Costa Rica, the Dominican Republic, Mexico and Peru. Some of these issues could have
come this year but due to a change of priorities because of the pandemic, they are more likely to come
in 2021.
The example of Chile also shows a key trend in the green bond segment -- after the first sale issuers
tend to come back to market with more and much larger issues. This in turn fuels the growth of the
asset class.
This year has also seen Brazil stand out on the green bond front, at a time when there has been very
strong international criticism of President Jair Bolsonaro's lack of protection of the Amazon rainforest
(see BRAZIL: Agribusiness focus risks rise in deforestation - July 23, 2019).
In June, the infrastructure ministry announced Latin America's first green bond programme to fund
infrastructure projects. This will play a key role in the country's post-pandemic economic recovery.
The initial focus of the programme will be the railway sector. Praised by the CBI as an important
milestone, the programme will help decarbonise the Brazilian logistics sector, which currently relies
heavily on roads and diesel-powered truck transportation.
Last year also saw the CBI sign a Memorandum of Understanding with Brazil's agriculture ministry to
identify green and sustainable opportunities in one of the country's most important business sectors.
Brazil ranked third among all emerging-market nations in terms of cumulative 2012-19 issuance, with
USD5.43bn according to the IFC. Latin America's largest economy is likely to see a strong green bond
expansion in the coming years as a result of the initiatives being undertaken with the help of
organisations such as the CBI.
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Lifting COVID-19 measures may hit resilient eastern EU
Monday, August 10, 2020
As income support fades out, health uncertainties, weak global demand and disrupted
trade may hamper an economic rebound
The European Commission published its summer forecast on July 7. Available second-quarter data
indicate a shallower recession in most of the eleven eastern EU member states (EU-11) than the rest
of the EU in January-June. This may be due to a strong start in January-February, followed by strict but The premiers (L-R) of Slovakia (Igor Matovic),
Poland (Mateusz Morawiecki), Czech Republic
shorter lockdowns and macroeconomic measures introduced to smooth the COVID-19 pandemic’s (Andrej Babis) and Hungary (Viktor Orban) at a
impact. However, the number of cases is still a concern. Visegrad Group meeting in Lednice following a
COVID-19 outbreak,there, Czech Republic, June
11 (Reuters/David W Cerny)
What next
The task of balancing public health and economic concerns will be complex. Capacity to manage the
pandemic has improved and the current shallow wave of contagion is mostly under control. However,
relative stability may yet be overturned as removing movement restrictions and reopening economic
and social activities lead to an accelerating rate of transmission. Important economic partners globally
will be heavily affected by the pandemic.
Subsidiary Impacts
◦ Projections for economic recovery in the second part of the year will be subject to downside risks.
◦ European solidarity will likely continue to be tested by political controversy over the rule of law.
◦ A European-wide vision for green, digital transformation and resilience may emerge.
Analysis
The Commission's Summer 2020 Economic Forecast, issued on July 7, indicates steep declines in
economic activity for March and April. With the subsequent easing of lockdown measures came a
gradual turnaround, to be seen in some retail data, patterns of electricity consumption, Google
community mobility reports and indicators of pollution.
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Q2 contractions in most of EU-11 were below EU average
There is some divergence between countries as regards the economic impact of COVID-19. On July
31, Eurostat preliminary flash estimates including ten EU economies put the worst affected in April-
June as Spain (18.5% contraction quarter-on-quarter). France (13.8%) and Italy (12.4%) also
contracted. The deceleration in Germany (10.1%) was below the EU average (11.9%), along with the
Czech Republic (8.4%), Latvia (7.5%) and Lithuania (5.1%). Recovery seems likely to prove prolonged.
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Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contactOxford Analytica Daily Brief ® COVID-19 essential briefing Greater EU-11 resilience While full analysis of the factors accounting for this variance awaits more real economy data, it appears likely that the pandemic was more severe and and longer in some sectors than others, with knock-on effects on national economies according to their structure. This is clearly the case with Croatia and Slovakia, whose large tourism and vehicle-manufacturing sectors respectively were badly hit by lockdown, but are expected to rebound quickly once activity resumes. In general, the EU-11 still have larger rural populations, which are more self-reliant thanks to easy access to food and less susceptible to pandemic transmission because of their dispersal. They also made a significant start on developing their IT sectors before the pandemic hit, which in some cases helped accelerate the development of online shopping and the digital delivery of other services during lockdown. Equally, the relatively early relaxation of lockdown and the powerful stimulus spending in Germany, their main trading partner in Europe, may have helped slow down economic decline. Risks remain significant All EU-11 introduced strict lockdowns and allocated significant funds to support incomes and to bolster the capacity of the public health system (see EU: Anti-virus policies may hurt democracy in East - March 30, 2020). According to the stringency index in the Oxford COVID-19 Government Response Tracker, which takes account of all of these measures, by end-March, the level of stringency stood at values as high as 96 out of 100 in Croatia (where the level of income support was less than 50%). Romania, Poland and Czechia had values in the 80s and Slovakia, Hungary and Germany in the 70s. © Oxford Analytica 2020. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 8 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact
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COVID-19 essential briefing
By end-June and into late July, the stringency index eased significantly and quite steeply in Croatia
(24), with most countries hovering around 40. More conservatively, Hungary maintained a stringency
level of 52.
While the easing of restrictions is likely to help the resumption of more economic and social activity,
the number of COVID-19 cases is also rising. It is beginning to cause alarm in Romania (see
ROMANIA: Policy aims to surmount virus’s second wave - May 7, 2020), where there have been more
than 1,000 new cases daily since mid-July. Poland is also witnessing a surge, which is being
attributed to official messaging suggesting the worst is over.
Countries across the region are constantly reviewing social mobility and quarantine policies: as local
conditions vary the rules of social distancing, they become difficult to enforce, while slowing down
economic participation. There is also more opportunity for confusion or deliberate non-compliance
from exhausted or anxious members of the public.
Governments are balancing between restriction and relaxation
European solidarity and recovery
The success of the EU's leaders in agreeing not only the Multiannual Financial Framework (MFF) for
2021-27, but also the New Generation EU (NGEU) programme designed in response to the pandemic,
came as a great relief (see EU: Recovery deal offers hope for stability - July 23, 2020).
The EU-11 have received important allocations from the NGEU, including the Recovery and Resilience
Facility and the Just Transition Fund. Proposals for disbursement procedures at the EU level are to be
formulated by October, but actual implementation is likely to be deferred to the beginning of 2021.
Political complications could also arise as the European Parliament seeks to play a greater role and
EU institutions attempt to link spending to rule-of-law conditions, which Poland and Hungary are
resisting in particular.
Moreover, EU-11 ability to absorb EU funds has been uneven historically. For the current MFF, a high
performer in terms of absorption, such as Hungary, has planned the use of its allocation fully, but has
spent only 69% so far. At the opposite end, Bulgaria has planned 79% and spent only 40%, with only
slightly better figures for the Czech Republic and Poland.
European industrial renaissance?
The NGEU has been adopted with the clearly expressed intent of supporting the European Green Deal,
the digital revolution and resilience. The challenges of managing the pandemic have focused minds
on the wisdom of globalisation with its long but potentially vulnerable supply chains (see EU: Virus
strengthens drive for economic sovereignty - June 10, 2020). According to a Polish Economic Institute
report , import substitution for components made in China with local production could lead to
significant increases in annual value-added generation in the EU-11, especially in Poland.
EU-11 could benefit if shorter supply chains cut Chinese imports
The EU-11 could become even more attractive for business as a consequence. It already has a good
industrial base, with a highly qualified and competitive labour force. It has proven ability to integrate in
global value chains that support West European firms and multinationals.
The focus on infrastructure investment through the NGEU will help the region upgrade transport and
internet links, supporting its ambition to become a logistics hub.
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Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contactOxford Analytica Daily Brief ® COVID-19 essential briefing Strong IT sectors could provide a much-needed edge and opportunity to move up global value chains. A recent Eurostat study estimates that the ICT sector, including services and manufacturing, represented 3.6% of EU GDP in 2017. While Ireland is a clear leader, with the sector contributing 9.3% of value-added, Hungary and Bulgaria where the ICT sector represents around 5% of value-added have also performed well. Romania, Bulgaria, Hungary, Slovakia, the Czech Republic and Croatia were at or above EU levels in terms of ICT sector share in value-added generated by the non-financial business economy. © Oxford Analytica 2020. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 10 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact
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COVID-19 essential briefing
July 16, 2020
Local lockdowns will be key in COVID-19 management
Europe’s largest COVID-19 study shows that only 5% of Spaniards have had COVID-19;
one-third of them were asymptomatic
Source: Instituto de Salud Carlos III; ENE-COVID National Seroprevalence Study, July 6
The prevalence of COVID-19 varies dramatically from region to region
Share of population 51,958 28.5% Seroprevalance broken down by demographic (% of those tested)
with antibodies to people were
tested asymptomatic Gender Age Municipality size
SARS-CoV-2, 8-22 June 7
100,000
(% of those tested)
Soria
}
6 20–34
(14.4%) 4.6% tested
35–49
positive 50–64 >65
Female MaleOxford Analytica Daily Brief ®
COVID-19 essential briefing
June 30, 2020
COVID-19 will drive record Latin America recession
Latin America is now the global hotspot for the pandemic, with over 2mn cases
and 100,000 deaths
Sources: European Centre for Disease Prevention and Control; IMF; Pew Research Center; World Bank
COVID-19 cases have tripled across Latin America over the past month… … while the likely economic cost is set
to dwarf the impact of the 2008-09
COVID-19 fatality rate, as of June 29
financial crisis
(deaths per million)
GDP forecasts (% change)
Bahamas 0-60 60-120 120-180 180-240 240 2020 2021 2009 comparison
Mexico or higher
Argentina Brazil Mexico
Cuba 10
Jamaica
Haiti
Honduras
Guatemala Nicaragua 5
El Salvador
Panama
Costa Rica Venezuela Guyana
Suriname 0
1,344,143
Colombia
-5
COVID-19 Ecuador
confirmed cases -10
Peru
(as of June 29) Brazil
-15
Bolivia
Chile Peru
Brazil 10
Paraguay
279,419 5
Peru Chile
0
Chile
Uruguay
Argentina
-5
Mexico
-10
Argentina
Apr May Jun -15
The world’s most urbanised and unequal region, _ Popular acceptance of lockdowns will become
Latin America is struggling to contain the spread of increasingly frayed as the impact on livelihoods
COVID-19, especially in urban slum areas also hardest hit deepens.
economically by lockdowns.
_ The socio-economic fallout from the pandemic
In April the IMF estimated a 2020 regional contraction
will worsen existing deep levels of poverty and
of 5.2%. It now estimates a fall of 9.4% and a rebound of
inequality.
only 3.7% in 2021.
Despite increasing economic damage and the apparent _ Global recession will worsen the effect:
failure to halt the pandemic, in part given population remittances to the region may fall by 19%,
density and the difficulty of halting movement in large compared to 11% in 2009.
informal economies, governments have limited options
_ Regional governments lack the financial firepower
to ease lockdowns, with case numbers rising sharply and
to supply sufficient social aid or economic stimulus.
the peak still weeks away.
See also: Prospects for Argentina to end-2020 -- June 24, 2020
Prospects for Mexico to end-2020 -- June 15, 2020
COVID-19 impacts will cut Latin American remittances -- June 11, 2020
Prospects for Brazil to end-2020 -- June 10, 2020
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Global travel deals will be subject to reversals
Tuesday, June 16, 2020
After months of border closures, many countries are implementing measures to restart
global travel
Most European countries yesterday lifted the strictest travel restrictions related to COVID-19. The
pandemic has seen an unprecedented reduction in global travel. Previously unthinkable travel bans
and border closures have been implemented throughout the world in an attempt to control the spread Passenger at the Zaventem International Airport,
Belgium, June 15 (Reuters/Francois Lenoir)
of SARS-CoV-2, the virus that causes COVID-19. Many countries are now beginning to ease
restrictions, aiming to achieve a new and sustainable normal. Travel is a crucial component of the
global economy and the sector is restarting, but it faces major challenges.
What next
Outright travel bans are being replaced by periods of mandatory quarantines, testing of passengers on
arrival, ‘travel bubbles’ and preferential treatment by country and city of departure. Measures will be
country-specific, reflecting each country’s epidemic. Reciprocal arrangements between countries and
groups of countries will expand. These measures are likely to be subject to short-notice changes.
Importation of new COVID-19 cases is inevitable as some will go undetected. This could prompt
localised lockdowns and temporary reversals in travel arrangements.
Subsidiary Impacts
◦ Domestic air travel will begin its recovery much ahead of international travel as it will not have to deal
with border restrictions.
◦ Large outbreaks could lead to quarantines for individuals traveling to and from the affected country
until control has been regained.
◦ Improvements in testing quality and capacity will significantly aid the global recovery process.
Analysis
By April, Pew Research estimated that over 90% of the world's population lived in countries that had
imposed travel restrictions on arrivals from abroad. These measures aimed to reduce the importation
of COVID-19 cases. This was important at the start of the epidemic, when imported cases had a
disproportionate impact on the epidemic's growth.
The purpose of current travel restrictions is to prevent the net spread of infection from areas with high-
level transmission to areas with low-level transmission, risking a 'second wave' of infections. The
travel sector plays a vital role in many economies and tourism alone accounts for some 10% of global
GDP (see INTERNATIONAL: Tourism will settle to a new normal - June 8, 2020). Consequently, travel
restrictions involve important cost/benefit calculations.
Travel bans and quarantines
Travel bans completely remove travel as a contributor to the spread of the COVID-19. In contrast,
quarantines allow travel to take place, but mandate that an individual stays in a designated location for
a set period. For COVID-19, the standard is 14 days -- based on evidence that the time to develop
symptoms (incubation time) is considered to be 2-14 days, with a median of five days (see
INTERNATIONAL: Asymptomatics will hinder virus control - May 14, 2020).
Although two weeks of quarantine may be acceptable to long-term visitors/residents, this poses a
significant barrier for short-term tourist and business travel. Countries wanting to increase tourist
numbers are looking to remove quarantine requirements, though any quarantine faced by tourists
when they return home is also problematic.
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Bubbles and bridges
'Travel bubbles' and 'air bridges' refer to the bilateral removal of quarantine measures between
countries. The concept was first mooted in the context of a potential 'trans-Tasman bubble' between
Australia and New Zealand. The idea has been taken on by a number of other nations, including the
Baltic bubble between Estonia, Latvia and Lithuania, which came into effect in mid-May. Nordic
countries -- apart from Sweden -- and others in the Balkans and elsewhere are also implementing
similar 'bubbles'.
Several factors make a country attractive to others for such arrangements -- most notably a low level of
transmission/cases demonstrated by a reliable detection system.
Geography is important -- people are more likely to have family/work interests in nearby regions and in
some instances, this may facilitate the use of personal vehicles. The economic value associated with
visitors from certain countries and for specific purposes is also a consideration; Singapore is first
focussing on developing 'green lanes' to allow essential business travel before looking at leisure
travel.
Country 'travel bubbles' will expand over coming months
As more countries lower their cases and demonstrate consistent low transmission levels, the number
and size of bubbles will rise. If cases significantly increase in some regions, this process is likely to be
reversed.
Non-pharmacological interventions
In parallel with wider social efforts, basic public health and infection control measures are likely to be a
feature of the travel sector for the foreseeable future.
These include a focus on frequent and high-quality hand washing, good respiratory hygiene, the use of
face masks and regularly disinfecting surfaces. Social distancing will also be required in transport
hubs and potential requirements for new seating arrangements could markedly reduce passenger
capacity -- which would need to be built into future business models.
Personal safety will be an important consideration for passengers looking to travel, especially
vulnerable individuals. This will be a focus as airlines attempt to increase operations, potentially
involving the use of personal protective equipment, restriction of toilet access and a reduction in
interactions such as food and beverages service.
Airlines may also look at installing screens, reviewing ventilation systems, increasing the use of
biometrics and other innovative safety features.
Symptom-based screening
Early in the pandemic temperature checks were used widely -- however, many people with COVID-19
do not have fever, there are multiple other causes of fever and recording devices often lack sensitivity.
Inability to detect pre-symptomatic or asymptomatic cases is problematic, as is the fact that anti-pyretic
agents can mask symptoms.
Alongside temperature checks, health questionnaires have been used to detect symptoms. However,
these suffer from similar issues and are labour-intensive. Symptomatic screening may have a role
within a wider set of travel measures, but cannot be exclusively relied upon.
Testing
Testing passengers for current infection, either on arrival or in the days prior to departure, could
potentially allow safe travel, though there remain issues with the sensitivity of the RT-PCR swab tests.
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False negatives could result in infected individuals not quarantining, and a person with a negative test
may later become infectious due to the incubation period.
Additionally, individuals can test positive on a swab for weeks after COVID-19 recovery -- viral remnants
are detected but it is thought this poses no risk of transmission.
Testing will be difficult to implement for mass travel
Although not perfect, testing can play an important role in risk reduction measures. Vienna airport is
offering tests to passengers arriving and departing as a mechanism for avoiding quarantine, and
Emirates was the first airline to conduct rapid, onsite testing. With regard to capacity, testing may be
viable at current levels of international travel, but this may not be the case as travel begins to increase.
Countries may opt for a set number of random tests per flight (for higher risk countries, more or
mandatory tests may be required) in order to remove the need for long quarantines. Greece is adopting
this approach.
Immunity passports
Testing can also indicate who has already had the virus. One suggestion is that individuals shown to
have antibodies could be allowed to travel freely -- there is a precedent with diseases such as yellow
fever.
However, the level of protection afforded by COVID-19 antibodies, the length of time that any protection
lasts and the role of these individuals as a vector for transmission remain unknowns. Alongside these
questions, there are also significant ethical issues, including equality of access to tests, possible new
forms of discrimination and a potential incentive to catch COVID-19.
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Asymptomatic spread will hinder virus control efforts
Thursday, May 14, 2020
Transmission of COVID-19 often occurs from individuals with no symptoms, which
hinders attempts to limit future spread
The COVID-19 pandemic spread across the globe at pace. The scale of community spread, alongside
a lack of resources, forced many countries to abandon containment policies and introduce restrictive
measures to suppress transmission, including lockdowns. During this time, the research community Restaurant with social distancing measures in
Bangkok, Thailand, May 4 (Reuters/Jorge Silva)
has concluded that many people pass on SARS-CoV-2, the virus that causes COVID-19, while
showing no signs of infection, complicating efforts to formulate a post-lockdown ‘new normal’.
What next
Measures that are to be introduced, or lifted, by governments will need to be examined through the lens
of asymptomatic and pre-symptomatic spread and modified accordingly. The importance of these
forms of transmission will mean less weight is put on the purely symptom-based case detection
strategies, testing policies, and tracing/isolating efforts seen during the early stages of the pandemic.
For policy making, all citizens, unwell or not, will be treated as possible sources of contagion.
Subsidiary Impacts
◦ Symptom screening alone, such as temperature checks, will not be enough to allow public
gatherings/major events to take place.
◦ Many social distancing measures will remain in place until an effective treatment and/or vaccine is
available.
◦ Even greater focus will be placed on antibody testing to show those at lowest risk of contracting and
spreading the virus.
◦ Facemasks will become commonplace worldwide, especially in crowded settings such as public
transport, and represent a growing industry.
Analysis
Pre-symptomatic transmission refers to the infection of a person with SARS-CoV-2 by an individual
who has the virus and will later develop symptoms, but has not shown them yet.
Asymptomatic transmission refers to the spread of the virus by individuals who never go on to
experience any symptoms.
Without symptoms, an individual may never have any suspicion that they were infected. They are
therefore unlikely to trigger a test, trace and isolate effort. These issues also arise in cases of
individuals whose symptoms are at the mildest end of the disease spectrum.
Evidence base
Reducing transmission will be a major focus for strategies aiming to establish a 'new normal' that
allows some activities to resume while keeping the epidemic's peak over. The period during which an
individual is most infective is therefore extremely important. Minimising the contacts that people have
during their most infective stage will have a proportionately greater effect on reducing transmission
than at any other stage.
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COVID-19 essential briefing
A person is at peak infectiousness in the two days before symptoms
begin
Research suggests that infectiousness peaks 0-2 days before symptom onset, with a median time to
symptoms (incubation time) of five days (for 5% of people this is over 12.5 days). The time to peak
infectivity is thought to be similar for asymptomatic individuals. For both cohorts, not only are
individuals unaware they are highly contagious, but those around them also have no visual clues that
the person is unwell.
A well-received publication in Science modelled the contribution of the different transmission routes; a
broad interpretation is: pre-symptomatic 45%, symptomatic 40%, environmental 10% and
asymptomatic 5%. This is a model, however, and more research would clarify these data.
Comparison with other coronaviruses
Although SARS-CoV-2 shares several features with the Middle East respiratory syndrome coronavirus
(MERS-CoV) and the severe acute respiratory syndrome coronavirus (SARS-CoV), there are key
differences. Importantly, the viral load of patients with SARS or MERS peaks around 7-10 days after
symptom onset, in contrast to those infected with SARS-CoV-2. This means pre-symptomatic
transmission is of far greater relevance to COVID-19.
The replication of SARS-CoV occurs predominantly in the lower respiratory tract, in direct contrast to the
high level of shedding in the upper respiratory tract that is observed for SARS-CoV-2, making the latter
highly transmissible among pre-symptomatic individuals. These factors are key to why COVID-19 has
spread so quickly and not been contained by the symptom-based strategies that had proved
appropriate for the control of SARS during 2002-04.
Travel
Early in outbreaks, imported cases and travel restrictions play an important role, though this
diminishes once there is widespread community transmission. Singapore banned visitors from Hubei
and then China very quickly; in combination with a test -trace-isolate approach this allowed good early
control. However, travel bans for other countries, notably those in Europe, were brought in too late and
by the end of March, 80% of cases in Singapore were imported which triggered significant community
transmission.
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COVID-19 essential briefing
Temperature screenings alone will not be enough to control the
pandemic's spread through travel
As countries begin to control the spread of COVID-19, the relevance of travel restrictions will grow
again and transmission without symptoms will determine policy. This route of spread means that
symptom screening, such as temperature checks (already insensitive at best for symptomatic cases),
cannot be relied on as it is possible that asymptomatic and pre-symptomatic individuals alone could
sustain the epidemic.
This also increases the potential for selective travel restrictions that favour countries that have gained
control of their outbreaks and can provide robust evidence of low case numbers (see
INTERNATIONAL: Tests will aid lockdown exit strategies - March 27, 2020).
Super-spreader events
Super-spreader events are where an infected individual transmits the virus to many more others than
would be expected and these events often receive most coverage during the early stages of an
outbreak.
A well-known example is the Shincheoni Church in South Korea, where the individual was
symptomatic. However, other examples such as a Seattle choir, where 45 of the 60 people became
infected and there have been two fatalities to date, have been attributed to transmission by an
individual without symptoms.
In the context of a high caseload, the variation between individuals in generating new infections has
little effect on transmission dynamics at the population level. However, as community transmission
falls, this individual variation and the associated super-spreader events will gain importance again.
The fact that individuals may not realise they have COVID-19 and offer no indication of infection to those
around them makes super-spreader events more likely.
Hospitals
These forms of transmission pose significant problems to healthcare systems. To date, they have
been broadly overlooked as hospitals have had to focus on coping with the surge of COVID-19 patients
and only had resources to focus on symptomatic cases.
However, healthcare workers see many patients each day and in each interaction the virus may be
transmitted in either direction, even if no party is experiencing symptoms. An infected healthcare worker
is an extremely dangerous vector for transmission -- their contact patterns mean they have the potential
to infect a high number of individuals who are likely to be among the most vulnerable.
Facemasks
Asymptomatic and pre-symptomatic spread and the issues they pose make the case for facemasks
compelling -- especially in settings where social distancing is unfeasible.
The primary purpose is infection control, to block emission of droplets from the wearer and protect
those around them. Much of the reluctance to advocate their usage has been due to concerns it could
trigger even greater shortages of masks for healthcare professionals.
However, there is growing evidence that home-made cloth masks can significantly reduce respiratory
droplet emission associated with speech. Already part of many Asian societies, the use of masks in
certain situations is now being increasingly mandated across Europe and North America.
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COVID-19 essential briefing
First COVID-19 vaccine may not end all distancing
Tuesday, May 12, 2020
The COVID-19 pandemic has spurred breakneck research to find a vaccine, reducing
the timeline from 15 years to 18 months
The COVID-19 pandemic is now in its fifth month with 4 million reported infections, of which some
300,000 people have died so far. While studies show that patients mount an immunity to the virus (at
least in the short term) and immediate re-infection is highly unlikely, it is estimated that some 90% of Scientists working on a potential vaccine for
COVID-19 at Cobra Biologics in Keele, Britain
the population has still not been infected. A vaccine would make the population resistant to the virus, (Reuters/Carl Recine)
stopping its transmission. Over 100 candidates are in the pipeline, and some clinical trials are already
underway.
What next
The prospect for finding a good vaccine within a year is not impossible, but highly optimistic. There
may however emerge a vaccine that works sufficiently well to keep a large section of society protected.
Even a partially effective vaccine, along with good antiviral drugs and better testing, would be able to
keep the pandemic under control, though some social distancing, such as mask wearing and the two-
metre rule, may become norms.
Subsidiary Impacts
◦ Immediate research will focus on SARS-CoV-2 but it will explore broad antivirals/pan-pathogen
vaccines.
◦ Pandemic preparedness will be expanded and accelerated to focus on diseases other than flu.
◦ Results from immunity studies will be critical in designing future exit strategies.
Analysis
Immunisation is the controlled introduction of a specific stimulus (antigen) to the body with the aim of
building immunity against future natural infection. To date, about 30 vaccines to viral and bacterial
diseases have been developed.
On average, it takes a novel vaccine some 10-15 years from discovery to licencing. A 2018 study
estimated that for epidemic infectious diseases the cost runs at a minimum of 2.8-3.7 billion dollars
each and have a 94% chance of failure.
COVID-19 is reducing vaccine production time from an average of 10
-15 years to less than 18 months
The fastest that a vaccine has ever been developed from isolating a virus to administering the vaccine
is for measles and took ten years (1954-1963). The fastest vaccine to get through human testing was
for Ebola and took five years (2014-2019). A timeline of 12-18 months is an optimistic, best-case
scenario, and subject to the first candidate vaccines in trials showing a good response (see
INTERNATIONAL: Science may shorten COVID-19 duration - February 28, 2020).
Vaccination methods
Traditionally, vaccines have used whole viruses which were weakened (live attenuated vaccine, such
as smallpox) or killed (inactivated vaccine, such as rabies); or immunologically relevant parts of a virus
such as specific proteins (subunit vaccine, such as hepatitis B).
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COVID-19 essential briefing
Modern vaccine design (DNA/RNA vaccines) uses a vector (usually DNA from another virus or
nanoparticles) to deliver genetic coding from the virus to our cells and force them to produce antigen,
as would happen in a natural infection. The rVSV-ZEBOV vaccine against Ebola, for example, uses the
Vesicular Stomatitis Virus (VSV) as the delivery vector for the ebolavirus protein.
One such DNA vaccine in trial for COVID-19 is ChAdOx1 nCov-19 at the University of Oxford.
An RNA vaccine has never been licenced before, but one is being trialled by Moderna called mRNA-
1273. Newer technologies have a better safety profile but are riskier in terms of efficacy.
At least eight other vaccines (including some that use established methods) are starting human trials
and over 100 candidates are in pre-clinical testing.
Developing a vaccine
Pre-clinical work (1-5 years) includes identifying a virus, developing a reagent and testing it on
animals. Scientific advancement and modern platforms that can be adapted to novel pathogens have
already expedited this process to about four months for SARS-CoV-2, the virus that causes COVID-19.
Clinical testing, carried out in humans, has three phases.
Phase I (up to one year) involves 20-30 healthy volunteers and investigates tolerance, dosage and
immune responses. These are underway for a few COVID-19 candidates already. If the vaccine
triggers the production of specific antibodies and protective immune cells, the candidate is promoted
to controlled randomised phase II (up to two years, involving hundreds of volunteers) and further on to
phase III trials (1-4 years, involving thousands of volunteers).
These advanced stages also test for safety (ie, that it does not cause major side effects) and efficacy
(ie, how well the vaccine protects against the disease relative to a control group who were not
administered the vaccine). This year's flu vaccine, for example, has a 45% efficacy.
A vaccine with 50% efficacy cuts chances of getting ill by half
Even if a vaccine has 50% efficacy, it reduces the chances of being ill by half; and in a scenario where
there are millions of infections, reduction in any proportion is useful.
Efficacy is normally tested in a 'natural' scenario where participants continue with their daily life. Trials
are usually double-blind, where neither the experimenter nor the participant knows whether they get the
test vaccine or a control/placebo. Some COVID-19 trials are expediting the process by organising them
as multicentre, highly parallel studies testing a number of candidates in different risk groups.
Scientists have also recently discussed the possibility of 'challenge trials' to expedite the process,
wherein healthy volunteers are vaccinated and then subjected to the virus. This is ethically not
prescribed for diseases which do not have a proven cure, but the possibility is being debated,
considering that COVID-19 shows only a mild illness in young and heathy people.
Sometimes, vaccines can induce the production of a certain antibody that can worsen a disease
through antibody dependent enhancement (ADE), and this has previously been seen for SARS, which
is related to COVID-19. This will be a major concern in the safety testing of vaccines for COVID-19, but
the approved candidate will not have safety concerns.
A vaccine that has successfully passed clinical testing may be submitted for licencing. This would be
suitable for mass immunisation programmes.
Vaccine manufacturers may already have rights over certain candidates or may bid to procure
contracts. New manufacturing units are already being funded by the Gates Foundation and some
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Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contactOxford Analytica Daily Brief ® COVID-19 essential briefing vaccines (such as ChAdOx1 nCoV-19) are being mass produced to have a large stockpile ready to go into phase III trials. There are suggestions that existing vaccinations such as the MMR and BCG may be protective for COVID-19 by boosting the immune system to respond better to infections. However, understanding these effects on the complexity of the human immune system could take even larger trials to prove efficacy. As a concept they are tempting: they are safe and can be mass produced using existing infrastructure. The need for other strategies To counter SARS-CoV-2, the vaccine will need to cover 60-80% of the world population. If immunity is short-lived and the virus appears in seasonal cycles, it may be virtually impossible to eradicate it (see INTERNATIONAL: COVID-19 cannot be eradicated - May 4, 2020). Many countries have no manufacturing units and most of the world's vaccines are produced by companies in China and India, especially those vaccines that are supplied to developing countries, as part of UN immunisation goals. Already, institutions such as the WHO, Medecins Sans Frontieres, Coalition of Epidemic Preparedness Innovations and Gavi, The Vaccine Alliance supported by the International Finance Facility for Immunisation aid the development and delivery of vaccines to regions otherwise unable to procure enough. They may be crucial in combatting the pandemic by pushing for more equitable access to vaccines across countries. © Oxford Analytica 2020. All rights reserved No duplication or transmission is permitted without the written consent of Oxford Analytica 21 Contact us: T +44 1865 261600 (North America 1 800 965 7666) or oxan.to/contact
Q4 2019 UPDATE
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